A divergent trend was witnessed between the two key benchmark indices with the barometer index, the S&P BSE Sensex, registering small losses and the Nifty 50 index registering minuscule gains on provisional basis. The Sensex declined 48.96 points or 0.18% at 26,794.18, as per the provisional closing data. The Nifty rose 1.85 points or 0.02% at 8,220.80, as per the provisional closing data.
The Sensex fell 51.07 points or 0.19% at the day's low of 26,792.07 in late trade. The barometer index rose 165 points or 0.61% at the day's high of 27,008.14 in early trade, its highest level since 29 October 2015. The Nifty lost 9.10 points or 0.11% at the day's low of 8,209.85 in late trade. The index rose 43.05 points or 0.52% at the day's high of 8,262 in early trade, its highest level since 26 October 2015.
In overseas stock markets, Asian and European stocks edged higher after data overnight showed US private-sector employment gains accelerated in May 2016 and another data showed filings for unemployment benefits in the US declined for a third consecutive week. The US economy is the world's biggest economy. Meanwhile, the European Central Bank (ECB) left key interest rates unchanged after a monetary policy review yesterday, 2 June 2016, in line with investors' expectations. ECB President Mario Draghi said that the central bank remains ready to use all the tools within its mandate to make sure that the low-inflation environment doesn't become entrenched. Draghi said that the central bank could push interest rates further into negative territory if needed.
Chinese stocks shrugged off data showing slowdown in growth in China's services sector last month. In mainland China, the Shanghai Composite index settled 0.46% higher. In Hong Kong, the Hang Seng index closed 0.42% higher. The Caixin China services purchasing managers index (PMI) eased to a three-month low of 51.2 in May from 51.8 in April.
US stocks registered modest gains yesterday, 2 June 2016, on signs of steady job gains in the world's biggest economy. Private-sector employment gains accelerated slightly in May 2016, according to data from Automatic Data Processing Inc. Employers added 173,000 jobs during the month. The private sector employment data comes ahead of the influential US government's nonfarms payroll data. The US government will unveil the monthly job data for May 2016 later in the global day. The nonfarms payroll data could provide cues on the timing and pace of further interest rates increases from the US Federal Reserve. The job data has implications for the US monetary policy. The US central bank's mandate centers on maximizing employment and keeping inflation at a 2% target level. The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 14-15 June 2016. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
Chicago Fed President Charles Evans today, 3 June 2016, said in prepared remarks at the Global Interdependence Center in London that the Federal Reserve should avoid aggressive tightening of US interest rates if it doesn't want to upset the so-far-so-good economic apple cart. Evans said it may be appropriate to have two 25 basis point moves between now and the end of the year.
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Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,096 shares rose and 1,523 shares declined. A total of 181 shares were unchanged. The BSE Mid-Cap index was provisionally off 0.11%. The decline in this index was lower than Sensex's decline in percentage terms. The BSE Small-Cap index was provisionally down 0.42%. The decline in this index was higher than Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 2924 crore, higher than turnover of Rs 2184.14 crore registered during the previous trading session.
Telecom stocks declined on media reports that Reliance Jio Infocomm (RJIL) has begun selling its Lyf smartphones with SIM cards enabled for the high-speed service in India's bigger cities. Bharti Airtel (down 2.73%) and Reliance Communications (down 3.84%) edged lower. This is the first time regular consumers will get access to the Jio 4G network, following the company opening it up for employees late last year.
Index heavyweight Reliance Industries (RIL) was up 0.02% at Rs 956.15. RJIL is telecom arm of RIL.
Bharti Infratel was up 0.47%. Bharti Infratel is a telecom tower arm of Bharti Airtel.
Idea Cellular tumbled on reports that US based private equity firm Providence Equity Partners offloaded a large portion of its stake in the market at a discount to ruling market price. The stock was off 10.14% at Rs 106.35. The stock slumped on huge volumes. On BSE, 2.62 crore shares changed hands in the counter compared with average daily volume of 7.30 lakh shares in the past one quarter. Providence reportedly sold a 3.47% stake in Idea Cellular at Rs 110.50 per share, a discount of 6.63% to the stock's closing price on BSE yesterday, 2 June 2016. As per the shareholding pattern of Idea Cellular as on 31 March 2016, Providence Equity Partners owned 6.81% stake in Idea Cellular through its arm P5 Asia Investments (Mauritius) Limited.
Tractor maker Mahindra & Mahindra (M&M) rose 1.52% at Rs 1,353 after India Meteorological Department (IMD) retained its previous forecast of above normal rains for the 2016 southwest monsoon season (June to September). Good rains may boost demand for tractors. Meanwhile, M&M after market hours yesterday, 2 June 2016, announced the launch of new electric sedan eVerito. The eVerito would be available in key cities like New Delhi, Mumbai, Bangalore, Pune, Kolkata, Chandigarh, Hyderabad, Jaipur and Nagpur with immediate effect. It will be priced at Rs 9.50 lakh (ex showroom Delhi, for D2 variant, post state subsidy and FAME incentive). The direct drive single speed transmission eVerito can be charged at home. It can be charged in 1 hour and 45 minutes through fast charging technology. On a full charge, the Mahindra eVerito can travel for up to 110 kms (based on vehicle loading) and can achieve a top speed of 86 kmph. Its running cost is Rs 1.15/km assuming cost of electricity at Rs 7 per unit.
The eVerito also features Boost Mode and Telematics which include real time and immediate assistance wherever the vehicle may be.
Stocks of two-wheeler makers declined. TVS Motor Company (down 0.29%) edged lower. Bajaj Auto (up 1.35%) edged higher.
Hero MotoCorp (HMCL) was down 0.77% at Rs 3,113. The stock hit a high of Rs 3,207.90 and a low of Rs 3,105.90 in intraday trade. HMCL today, 3 June 2016, announced that it has further augmented its senior leadership team with the appointment of Malo Le Masson as the Head of Global Product Planning. Malo, formerly with Infiniti Premium car brand will spearhead HMCL's entire product planning for its global markets, including the domestic market in India. The appointment of Malo, close on the heels of HMCL making its Centre of Innovation and Technology (CIT) in Jaipur operational, significantly ramps-up its newly created function of global product planning, HMCL said in a statement. The announcement was made during market hours today, 3 June 2016.
Meanwhile, the outcome of monthly survey showed that the rate of growth in India's services sector eased last month as new business inflows expanded at the slowest rate since July 2015. The Nikkei India Services Purchasing Managers' Index (PMI) fell to 51 in May 2016 from 53.7 in April 2016. Output rose in three of the six tracked categories, namely Transport & Storage, Post & Telecommunication and Financial Intermediation. Although some service providers took on additional staff in May 2016, the overall pace of job creation was fractional. Input costs rose again, leading to a further increase in prices charged by service providers. Although service providers remained optimistic that output will expand in the year ahead, the level of confidence was the lowest recorded since February 2016.
Meanwhile, India's weather office India Meteorological Department (IMD) in its second stage forecast stuck to its preliminary forecast of above normal rains for the 2016 southwest monsoon season (June to September). Quantitatively, monsoon season rainfall for the country as a whole is likely to be 106% of the long period average (LPA) with a model error of plus/minus 4%. In its first stage forecast issued on 12 April 2016, the IMD had forecast rainfall to be 106% of the LPA with a model error of plus/minus 5%.
In its region wise forecast, the IMD said that the rainfall is likely to be 108% of LPA in North-West India, 113% of LPA in Central India, 113% of LPA in South Peninsula and 94% of LPA in North-East India, all with a model error of plus/minus 8%. The rainfall over the country as whole is likely to be 107% of its LPA during July 2016 and 104% of LPA during August 2016 both with a model error of plus/minus 9%. The quantum of the rainfall and its spatial and temporal distribution are critical for the country's agriculture.
The IMD said that the rapidly declining El Nino conditions became weak in early May 2016 and now have turned to neutral ENSO conditions. Recent changes in the atmospheric conditions over the Pacific also reflect the weakening El Nino conditions. Latest forecast from IMD-IITM coupled model indicates about 50% probability of La Nina conditions to establish during the monsoon season. Most of the other models also suggest development of La Nina conditions during the latter part of the monsoon season. El Nino conditions cause deficient rains in India whereas La Nina conditions trigger abundant rains in the country.
IMD also said on 2 June 2016 that the conditions are becoming favorable for onset of southwest monsoon over Kerala during next 4-5 days. The arrival of the rains at the Kerala coast marks the onset of the June-September southwest monsoon season in India. The IMD on 15 May 2016 predicted a delay of 6 days for the onset of the monsoon rains in Kerala this year from the normal onset date which is 1 June.
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